A common analogy used to explain what our funds do is an insurance policy. Investors, and in particular retail advisors, found this explanation comforting given the history of paying out in times of "market crisis". It perhaps also explained why during the low volatility, grinding higher good times of the equity market, that CTAs may not perform nearly as well, often making investors question the value at precisely the wrong time. I have never liked this explanation albeit admit to falling into this discussion trap more than once.
I prefer to describe what we do as Special Teams. This analogy seems to fit far better and was affirmed to me earlier this month as my son started football (American/Canadian style) and the market started to get volatile.
While insurance implies a guaranteed payoff that only occurs after an event or crisis, this is not what we do. We are not the same as buying S&P puts to protect the downside - a perfect negative correlation. Rather, we employ a strategy that has the potential to benefit during volatility, from more than just equity (includes Currencies, Interest Rates and Commodities), but also has a positive expected return over the long term. Insurance does not do this - at the end of the day, the winner of the insurance game is the insurance company - just ask Warren Buffet.
Special Teams have a similar but different function - they are relied upon at critical times to complete a task, put up points or protect field position. The goal isn't to only show up in the "clutch", but to be called upon as special players who also often hold other roles. Their value is positive, and their important contribution is significant to the outcome of the game.
Do we show up at key times? Yes. Do we contribute positively over time? Yes. Do we keep up to the returns of the stock market all the time? No. We aim protect your asset base and have the ability to add value at critical times of need.
For more about the innovative Auspice quantitative CTA and commodity strategies and the potential portfolio benefits, please give us a call.
IMPORTANT DISCLAIMERS AND NOTES
Futures trading is speculative and is not suitable for all customers. Past results are not necessarily indicative of future results. This document is for information purposes only and should not be construed as an offer, recommendation or solicitation to conclude a transaction and should not be treated as giving investment advice. Auspice Capital Advisors Ltd. makes no representation or warranty relating to any information herein, which is derived from independent sources. No securities regulatory authority has expressed an opinion about the securities offered herein and it is an offence to claim otherwise.
For U.S. investors, any reference to the Auspice Diversified Strategy or Program, “ADP”, is only available to Qualified Eligible Persons “QEP’s” as defined by CFTC Regulation 4.7.
For Canadian investors, any reference to the Auspice Diversified Strategy or Program, “ADP”, is only available to “Accredited Investors” as defined by CSA NI 45-106.